Contents:
Movie Theaters - US - November 2014 - Market Drivers
[Report Section]
Movie Theaters - US - November 2014 - Marketing Strategies
[Report Section]
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Movie Theaters - US - November 2014
Market Drivers
A primary driver for ticket sales is the buzz for each individual title,
created by the efficacy of marketing for the film, along with the popularity
of its stars and underlying intellectual property. This driver becomes less
powerful when the window between home video and theatrical release is
shortened.
●
At an average price of $8.15 per ticket, attending a movie theater
remains cheaper than most other out-of-home forms of entertainment,
including live entertainment and most sit-down dining experiences.
●
Annual variation in attendance is driven largely by the pull of films in release.
Box-office revenues are increasingly dependent on megahits, particularly from
successful franchises that generate multiple sequels. While the number of hits will
vary from year to year, over the longer term, the industry is vulnerable to trends in
the quality and marketability of the films and franchises produced by all of the
studios, as well as in the level of marketing effort behind those films. For exhibitors,
these trends have a strong influence not just on box office, but on revenues from
concessions and advertising, both of which depend on getting moviegoers in the
door.
Essentially, the power of buzz has to make a movie a must-see event before the
theatrical window closes and the movie becomes available for rental and purchase
for home video consumption. That type of firepower tends to be built upon the
popularity of the stars in the film, the underlying intellectual property (ie a comic
book series, a best-selling book, a sequel or prequel), the extensiveness of media
buys, and the positive press the movie receives over the course of its run, including
nominations for awards. As presented in Barriers to More Frequent Attendance, 28%
of moviegoers do not attend more often because they are not familiar with additional
films that they would like to see.
The window when new releases are exclusive to movie theaters is currently three to
four months from the film’s theatrical release, down from six months a decade ago,
and there has been increasing discussion of shortening this window. Some studios
have experimented with offering “premium video-on-demand (VOD),” in which
viewers could pay a premium to view a film via VOD as little as 30-60 days after its
theatrical release. There have also been a handful of experiments with shorter
windows and even simultaneous small-screen releases of films from major studios,
but exhibitors, which see the exclusive window as essential to their business model,
have resisted all experiments with shortening the window. In 2011, Universal
announced plans to offer the film Tower Heist on cable VOD at the premium price of
$60 three weeks after its theatrical release. After several exhibitors threatened to
boycott the film, the studio changed its plans.
In September 2014, Netflix announced that it would be making its first original film,
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a sequel to the 2000 martial arts hit Crouching Tiger, Hidden Dragon. The film will be
released simultaneously in IMAX and via Netflix’s streaming service in August 2015.
Netflix plans to produce more movies, including several starring Adam Sandler, for
release exclusively via its streaming service.
Most observers expect the theatrical release window to shrink as new media
channels continue to grow in popularity and gain bargaining power. In April 2014,
DreamWorks Animation CEO Jeffrey Katzenberg was quoted in Variety opining that
the theatrical release window will shrink to just 17 days, or three weekends, within
the next decade. If the release window dwindles or disappears, this will be a strong
negative driver for movie theater ticket sales, as fans who want to see a highly
anticipated new film will have the option of doing so at home, instead of standing in
line at the theater and perhaps missing a sold-out show.
Theaters have historically taken a back seat to studios when it comes to film
marketing. But considering the extent to which sales are dependent on
effective marketing, and the potential for low-cost campaigns via blogs and
social media, theaters may become more active in promoting particular
films. If theater chains become more skilled at generating buzz through
their own marketing outlets, they can more readily become independent
producers, with control over the length of the theatrical release window.
Theaters can obviously promise distribution for their own content, one of
the central determinants of funding for theatrical release content, which
provides the ability to hire A-list talent that generate movie buzz. AMC and
Regal are already headed in this direction with Open Road Films, a jointly
owned movie production company that has already produced multiple hits
since its launch in 2011 (including The Grey and The Nut Job, among
others).
For chains with more limited cash than the two leaders, potential lies in
picking up rights to distribute independently produced movies with no
distribution in sight. While a select few independently produced films that
gain buzz at major festivals are expensive to acquire, the majority are
available for distribution for less than the cost of production.
When no particular film calls itself out as a must-see-now product, attendance is
driven by the desire for an out-of-home entertainment experience. Ticket sales tend
to be highest on holiday weekends, surrounding Christmas and winter breaks from
school, as well as in the summer months when school is out.
The appeal of movies for a date night or family outing lies in part in the continuing
value of attending a movie theater, as compared to other forms of entertainment.
Even though ticket prices have risen to an average of $8.13 as of 2013, the cost of
seeing a film is still substantially lower than that for attending a sports event,
concert, play, or other live entertainment. The movie theater may also compare
favorably to the cost of a dinner out at a casual restaurant where appetizers, drinks,
dessert, taxes and tip can cost a family of four $100 or more. Even with concession
purchases, that same family may be able to see a movie for $50 or less.
While the most common reason for not attending more often is price (see
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Attendance), theater operators have largely kept a lid on ticket costs over the past
five years. The price of a movie ticket has risen 9% in current dollars from 2009-14,
keeping pace with inflation, but not rising further.
FIGURE 18: Average movie ticket cost, at current prices, 2009-14
Year
$
% change
2009
2010
2011
2012
2013
2014 (est)
7.50
7.89
7.93
7.96
8.13
8.15
5.2
0.5
0.4
2.1
0.2
Index (2009 = Index (2014 =
100)
100)
100
92
105
97
106
97
106
98
108
100
109
100
Source: MPAA/Mintel
FIGURE 19: Average movie ticket cost, at inflation-adjusted prices, 2009-14
Year
$
% change
2009
2010
2011
2012
2013
2014 (est)
8.28
8.57
8.35
8.21
8.27
8.15
3.5
-2.6
-1.7
0.7
-1.4
Index (2009 = Index (2014 =
100)
100)
100
102
104
105
101
102
99
101
100
101
98
100
Note: Adjusted for inflation using the All Items CPI
Source: MPAA/Mintel
Interest in 3D has declined as the novelty of this visual extravaganza has worn
away, with many moviegoers likely deciding that 3D screens are not worth the price
premium to them. Although the number of 3D releases is holding relatively stable
(37 in 2012, 41 in 2013, and 37 in 2014 – including upcoming releases, the
percentage of moviegoers who typically select a 3D screening for a film available in
both 2D and 3D versions declined from 34% from 2009-10 to just 24% of
respondents in 2013-14. This decline suggests that 3D will not be as helpful in
boosting average ticket prices in the future. Exhibitors, aware of this trend, are
focusing on other premium offerings, including branded premium theater
experiences, such as AMC’s ETX and Regal’s RPX.
FIGURE 20: Preference for 3D, April 2010-June 2014
“When a movie is available in 3D, do you usually go see the 3D version?”
Base: 13,490-13,902 adults aged 18+ who attended movies in the last six
months
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Source: Experian Marketing Services, Spring 2011, 2012, 2013, 2014 Simmons
NHCS Adult Study 12-Month. Copyright: 2014 Experian Information Solutions, Inc.
All rights reserved/Mintel
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Movie Theaters - US - November 2014
Marketing Strategies
Movie theaters depend on studios for nearly all of the marketing that gets people to
theaters. Studios promote individual films, and interest in those films drives traffic to the
exhibitors.
The major exhibitors use loyalty programs, social media, their websites, and mobile apps to
market their brands, with promotions and content aimed at their core audience of frequent
moviegoers. These strategies are discussed in more detail below, but AMC, in particular, has
a sophisticated social media presence and website aimed at serious movie fans.
Lacking in the exhibitors’ marketing strategies is any substantial effort to target less
frequent moviegoers and drive more frequent attendance among this group, or to bring in
new customers. Though this has traditionally been seen to be the responsibility of studio
marketing efforts, exhibitors also need to fight back against long-term declines in
attendance by drawing more casual moviegoers into theaters. While loyalty programs and
social media are effective at targeting theaters’ most valuable and engaged customers,
other strategies are needed to reach casual and infrequent moviegoers and build new
audiences.
Exhibitors also spend relatively little marketing effort on distinguishing their brands from the
competition, compared with other consumer-facing industries.
Three of the four major exhibitors offer customer loyalty programs. Loyalty programs hold
the promise of increasing brand loyalty and driving greater spending per customer, as well
as the potential to gather useful data on the attendance and spending patterns of some of a
brand’s most engaged customers. Loyalty programs also allow brands to see the results of
different offers and promotions on customer behavior and bottom-line results. Only
Cinemark has not established a loyalty program.
Regal’s Crown Club is the largest loyalty program in the industry, with more than 9
million active members at the end of 2013. According to the company, these members
accounted for approximately $921 million, or 32%, of Regal’s box office and concession
revenues during 2013. Regal Crown Club members earn credits based on how much they
spend at the box office and on concessions, and accrue rewards, such as concession items,
as they reach specified credit benchmarks (or example, a free popcorn at 50 credits). Crown
Club members also qualify for special discounts on less busy days of the week and access to
bonus rewards as they reach higher credit counts.
●
The Carmike Rewards program is similar to Regal’s program. Participants earn
points based on their spending on tickets and concessions and receive rewards when they
reach specified point totals. Both of these programs seem designed primarily to increase the
frequency of visits and perhaps encourage greater concessions spending among patrons
who already visit the exhibitor’s theaters regularly. Rewards vouchers expire within a few
months, creating a strong incentive for patrons to return regularly.
●
The AMC Stubs loyalty program is quite distinct from the Regal and Carmike
programs. Most significantly, patrons must pay a membership fee ($12/year, as of October
●
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2014) to belong. Instead of using credits or points, AMC Stubs rewards users with a $10
voucher for every $100 they spend. Members also receive free size upgrades on concessions
purchases and pay no online ticketing fees. The AMC Stubs program had 2.6 million
members at the end of 2013, and these members accounted for approximately 20% of box
office revenues during 2013. Stubs members spent 2% less on average per ticket, but 25%
more on food and beverage per patron 25%, making them much more profitable on average
than non-members.
●
One of AMC’s stated goals for the Stubs program is to increase switching costs, the
actual and psychological costs of choosing a non-AMC theater, for those customers who
have a competing theater nearby. Because members have already invested in the program
through their membership fee, the psychological barrier to choosing a competing theater
goes beyond the rewards they would forgo. AMC also mines data from loyalty club
transactions in order to develop targeted, relevant customer offers, leading to increased
attendance and sales.
AMC’s intensive online and social media presence includes a YouTube channel with a
large selection of original content updated daily. AMC produces five movie-related talk
shows for distribution via its website and YouTube channel. Of these, AMC Movie Talk is a
daily talk show, while the other four are produced once or twice per week, and all are aimed
at hardcore movie fans. AMC also creates other original content, such as celebrity interviews
and the AMC Jedi Council (“Star Wars Talk for Star Wars Fans”), on an occasional basis. The
goal of this programming and AMC’s activity in other online and social channels is to drive
greater brand loyalty and engagement among frequent moviegoers. The company
summarized its approach in its 2013 annual report: “We believe there is incremental
attendance potential to be gained from avid movie-goers who generate a disproportionate
share of industry revenues and who state that the quality of the movie-going experience
directly influences their movie-going habits.”
●
According to the company, AMC’s website receives more than 9 million visits per
month, with almost 300 million page visits per year. The company far outpaces its
competitors in overall social media engagement. As of October 2014, AMC’s Facebook page
had 4.5 million “Likes,” more than the other three major exhibitors combined. AMC also
leads its competitors in YouTube subscribers (more than 212,000) and Twitter followers
(more than 248,000).
●
Regal’s Twitter feed has attracted attention for its eye-catching low-tech animated
Vines, such as this one created for the September 2014 release of The Boxtrolls
(https://vine.co/v/Omuv2BDljBB). But with only 100,000 followers, Regal’s Twitter
presences still lags far behind that of AMC, while its YouTube footprint is minimal.
●
Cinemark uses its website and Facebook page to promote special programming like
its Cinemark Classics series, as well as the current blockbusters. With 1.2 million Likes, the
company’s Facebook profile is modest.
●
Carmike has a limited social media presence, relying primarily on improvements to
the customer experience at its theaters, including a focus on customer service, to drive
greater repeat business and word-of-mouth promotion. The company is most active on
Facebook, where it promotes its discount days and special events, as well as new releases.
●
Many consumers now see their mobile devices as almost an extension of themselves, or at
least the command center for their lives. Thus, mobile apps represent, among other things,
an opportunity for exhibitors to insert their brands into a very personal space, driving
greater brand awareness and loyalty. However, exhibitors’ mobile apps compete not just
with each other, but with movie information and ticketing apps like Fandango, which provide
information about multiple theater circuits. Fandango’s app, for example, has been
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downloaded more than 40 million times across all platforms, while the most popular
exhibitor app has not yet reached 10% of that number. The people who are most likely to
choose an exhibitor’s app are those who already have loyalty to the brand, or who live in an
area with only one convenient movie theater. Exhibitor apps, then, may primarily function
as a way to drive more frequent attendance by a subset of their customers who are already
relatively engaged with their brand.
All four major exhibitors offer apps, but Carmike’s is very basic, intended primarily as a way
for customers to access their loyalty program accounts and to find Carmike theaters.
Carmike’s app has not been updated recently and is not promoted on the company’s
website. The apps from the other three exhibitors also allow users to search for movies,
view trailers, find more information about currently and upcoming releases, check local
theater schedules, receive promotions, and purchase tickets. All but Carmike’s also allow
users to store their gift cards and share movie information via social media.
Regal launched its mobile ticketing app in 2012, and by the end of 2013, it had been
downloaded approximately 1.8 million times. It allows users to access their Regal Crown
Club accounts and supports mobile ticketing in select theaters. Regal’s app is also integrated
with the FirstLook Sync App produced by National Cinemedia, the advertising network that
supplies ads to Regal, AMC, and Cinemark. Users can turn on FirstLook Sync in the
auditorium before the movie and get enhanced content, coupons, and games synced to
their mobile devices.
●
The AMC mobile app has been downloaded nearly 2.5 million times as of the end of
2013 and generates almost a half million sessions per week, according to the company. The
app integrates with the AMC Stubs loyalty program and allows members to view and share
their collections of virtual ticket stubs. Other notable features include the ability to search
for theaters by amenity, to send gift cards directly from the mobile phone, and to create a
personalized movie queue of coming releases. The app also has an augmented reality
feature that recognizes movie posters and displays video content when a user points their
phone at a poster.
●
Cinemark’s app includes a novel feature called CineMode that rewards patrons for not
using their mobile devices while watching films at the theater. Users enable CineMode
before the start of the film which causes the screen to be dimmed and prompts users to
silence their volume. If CineMode is enabled for the duration of the movie, patrons are
rewarded with exclusive coupons and offers that can be used at their next visit to Cinemark.
As of the end of 2013, more than 3.5 million users had downloaded some version of the
app. The app’s popularity has likely been boosted by the opportunity to earn rewards
through the CineMode feature, since Cinemark doesn’t have a comprehensive rewards
program.
●
In addition to their loyalty programs, online and social media presences, and mobile apps,
exhibitors offer a variety of mostly small programs and special events that can help to draw
in new audiences and connect with local communities to build greater brand loyalty. Some
common strategies for building customer bases include special low-cost film series, discount
nights, and community events. A few programs are highlighted below.
Both Regal and Cinemark offer low-cost summer children’s film series aimed at
engaging local communities and building their brands by helping young families entertain
their kids during the summer. Cinemark’s program, called Summer Movie Clubhouse,
offered 10 recent popular family films on selected mornings for just $1 per person or $5 for
the series.
●
For fall 2014, many of AMC’s locations will offer an AMC Classics series featuring a
●
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different classic film of the 1960s-1990s every week for $6 per film or $25 for the series.
●
Carmike aims to draw in consumers on a budget in with programs like Stimulus
Tuesdays, which offers $2 popcorn and soda every Tuesday, and annual refillable popcorn
buckets.
●
Cinemark makes moviegoing extremely affordable for families one day per week:
Monday is Family Day, when groups of three or more pay just $1 per person. Many
Cinemark locations also offer a Senior Day every week, when ticket prices for seniors can be
as low as $5 for every show except IMAX and XD shows. Non-seniors can get the same
treatment on Discount Day, also once per week at many Cinemark locations.
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